Editing Barriers to entry (section)

===Primary economic barriers to entry===

* '''Distributor agreements''' – Exclusive agreements with key distributors or [[retailer]]s can make it difficult for other manufacturers to enter an industry. This is a particular problem if, prior to entry, the other firms in the market use intensive distribution strategies in order to restrict the access of potential entrants to distributors.<ref name="FahriKarakaya1989" /> In response, if access to existing distribution channels is too difficult, new entrants may create their own. For example, new low-cost airlines often encourage passengers to book online instead of through travel agents.<ref name=":0" />
* '''[[Intellectual property]]''' – A potential entrant requires access to production technology as efficient as that of the combatant monopolist in order to freely enter a market. [[Patent]]s, however, give a firm the legal right to stop other firms from producing a product for a given period of time, and so restrict entry. Patents are intended to encourage [[invention]] and [[technology|technological]] progress by guaranteeing proceeds as an incentive. Similarly, [[trademark]]s and [[servicemark]]s may represent a kind of entry barrier for a particular product or service if the market is dominated by one or a few well-known names. Incumbent firms may have an exclusive right to use the brand name, making it expensive or impossible for new entrants to license rights to names.<ref name="FahriKarakaya1989" />
* '''Capital requirements''' - Many industries require the investment of large financial resources to start a new business, which deters new entrants. For example, new airlines require millions of dollars for purchasing planes, staff training etc. In addition, new entrants often experience serious difficulties in raising funds for unrecoverable expenses, such as advertising and R&D. In the pharmaceutical industry, for instance, companies may invest heavily in research in order to develop Covid vaccines, then end up with disappointing results and lose all of their investment.<ref name=":0" />
* '''Restrictive practices''' – Established policies may protect existing players and restrict entry. For instance, air transport agreements may make it difficult for new airlines to obtain [[landing slot]]s at some [[airport]]s. Or Certificate of Need (CON) laws in some of US states may require medical service providers to file an application and prove community need before offering their services—a practice that has been found to benefit incumbents.<ref>{{Cite journal|last1=Baker|first1=Matthew C.|last2=Stratmann|first2=Thomas|date=October 2021|title=Barriers to entry in the healthcare markets: Winners and Losers from certificate-of-need laws|journal=Socio-Economic Planning Sciences|volume=77|page=101007 |doi=10.1016/j.seps.2020.101007|issn=0038-0121}}</ref>
* '''Supplier agreements''' – Exclusive agreements with businesses that represent key links in the supply chain can make it difficult for other manufacturers to enter an industry, e.g. when suppliers offer significant discounts to certain buyers or offer their product exclusively.
* '''Customer [[Switching barriers]]''' – At times, it may be difficult or expensive for customers to switch providers, especially if they have to retrain employees or modify internal information systems.<ref name=":0" /> Indeed, switching costs are often intentionally made high in order to discourage customers from changing suppliers and adopting the technological innovations provided by others.<ref name="FahriKarakaya1989" /> 
* '''[[Tariffs]]''' – Taxes on imports prevent foreign firms from entering into domestic markets.
* '''Taxes''' – Smaller companies typically fund expansions out of retained profits so high tax rates hinder their growth and ability to compete with existing firms. Larger firms may be better able to avoid high taxes through either loopholes written into law favoring large companies or by using their larger tax accounting staffs to better avoid paying the higher taxes.
* '''[[Zoning]]''' – Government allows certain economic activity in specified land areas but excludes others, allowing monopoly over the land needed.